Starting a Business in Singapore for Foreigners

Starting a business in Singapore is one of the best decisions any entrepreneur can make. For a long time, the country has been ranked as one of the best places to do business in the world.

To start a business in Singapore as a foreigner, you must first register a company and obtain a bank account. Continue reading for a step-by-step guide on how to accomplish this.

Advantages of starting a business in Singapore for foreigners

Singapore is a desirable location for entrepreneurs and multinational corporations looking to expand their operations internationally for the following reasons:

100% foreign ownership policy 

The Singapore law allows local corporations to be 100% foreign-owned. Besides, all of the benefits of Singapore incorporation are available to parent corporations that incorporate Singapore-based subsidiary firms.

Attractive tax regime

Singapore has an attractive flat tax rate of 17% for corporations. But local businesses, particularly new businesses, can take advantage of exclusions and tax advantages to pay a far lower effective rate. For example:

• Startups and new businesses with a maximum of 20 shareholders (and at least one individual owning 10% of the share capital) can get a $125,000 tax break on their first $200,000 in chargeable income for the first three years of operation.
• Businesses that do not qualify for the start-up exemption are eligible for a partial tax exemption of up to $102,500 for the first $200,000 in revenue.

For more information about tax exemptions for Singapore companies, refer to this article.

Flexible banking facilities

Singapore has five domestic and 119 foreign commercial banks, resulting in a competitive environment that fosters new banking products and pricing structures. Thus, foreign business owners in Singapore can enjoy a variety of appealing banking options.

For further information on opening a corporate bank account in Singapore, click here. 

Stable political and social environment

Singapore is socially and politically more stable than any of its regional neighbors or other world-class economic hubs. The country has one of the lowest crime rates globally, owing to the harsh punishments imposed for even minor offenses. Guns and other weaponry are strictly controlled by the government and police; therefore, violent and confrontational crimes are uncommon in common Singapore. According to the Economist Intelligence Unit’s Safe Cities Index, the city-state is also the world’s second safest city (EIU).

Which work pass do I need to set up a business in Singapore as a foreigner?

Foreign visitors and residents in Singapore must obtain a visa that specifies their residency or visit permissions. Certain passes provide foreigners more flexibility in launching a business than others, including the type of entity they can lawfully form.

Tips for starting a business in Singapore for foreigners

Singapore has gone to great lengths to remove red tape and help your firm get off to a fast start. To make things even easier, here’s a step-by-step guide to starting a business in Singapore for foreigners.

1. Meet the basic requirements

In particular, to register a local company, you will need to fulfill the following:

• Have your company name approved by ACRA (will be explained later in this article)
• Have at least one director who is either a Singapore citizen, permanent resident (PR), or EntrePass holder
• Have a minimum of 1 and a maximum of 50 shareholders
• Have a local registered address in Singapore 
• Appoint at least one company secretary within six months from the registration date of the company
• Have a minimum of S$1 in initial paid-up capital

2. Choose a business entity

Choosing the right business structure is the key to successful company registration in Singapore. It may have an impact on your company’s taxation.

Foreigners can register the following businesses in Singapore:

Private Limited Company (Pte Ltd)

Private limited companies are the most flexible business entity, with the most advantageous tax regimes.  The following are the characteristics of a private limited company:

• It can have 1-50 shareholders (owners)
• It needs at least one local director who is a resident of Singapore
• A private limited company has a separate legal identity from its owners
• It has the rights of a natural person
• It has perpetual existence
• Pte Ltd limits the liability of its shareholders to the amount they have invested in its shares
• It pays corporate tax (0%-17%)

Pte Ltd is considered more reliable by banks and financial institutions than a sole proprietorship or partnership. As a result, they can readily raise financing to expand their company’s operations.

Sole Proprietorship

This type of business is straightforward but carries more risk for its owner since they will be personally liable for their company. Thereby,  we advise this business structure to our clients only when their business is highly risk-free. The characteristics of a sole proprietorship are as follows:

• It has no separate legal entity from its proprietor
• The owner has unlimited liability for its debts and losses.
• The income of a sole proprietorship is considered as that of its owner
• The owner pays personal income tax (0%-22%)

You may also want to read a related  article:

Converting a Sole Proprietorship into a Singapore Private Limited Company

Limited Liability Partnership (LLP)

This entity is a hybrid of a corporation and a partnership. A limited liability partnership is the most advanced and latest of the three business entities, and it is the only one in which each partner’s personal liability is usually limited. Below are the features of an LLP:

• An LLP has separate legal existence from its owners
• Available only to Singapore citizens, PRs, or Entrepass holders
• Legal entities formed between 2 to 20 partners
• Profits are taxed at personal income tax rates without access to tax incentives
• Partners are held personally liable for liabilities and debts of the company
• Commonly used by law firms to limit the liability of partners across different deals

3. Choose the name of your company

To register your business in Singapore, you must first check with ACRA to see if your desired name has been approved. You should know if your suggested company name has been accepted or refused within a day. If your proposed name includes particular words like media, bank, law, finance, or education, an external governmental entity may be required to study and approve the name.

Here are some guidelines for you:

• The name must be unique, meaning not identical or too similar to other existing ones
• The name should not contain any offensive meaning or sensitive words
• The name should not imply any connection with the government agencies

You can check the availability of your desired company name using Biz Atom’s company name checking tool. Your approved company name will be held and secured for 60 days from the date of your application. You can extend the name reservation for another 60 days by filing an extension request immediately before the first hold ends. For more comprehensive information on choosing a company name, refer to:

How to Choose a Company Name in Singapore

4. Register your company with the help of a registered filing agent

If you’re a foreigner looking to start a business in Singapore, you’ll need to hire a professional incorporation service. This is a suggestion of the Accounting and Corporate Regulatory Authority (ACRA), the government agency in charge of all business registration in Singapore. 

A corporate service firm like Biz Atom can assist you with the entire business registration process as well as provide you with services like company secretary, nominated director, and registered address.

Other things you will need to provide to us besides the basic requirements we have mentioned above is as follows:

• Brief description of activities & SSIC Code
• Details of shareholders and KYC information
• Details of directors and KYC information
• Share capital details
• The company’s constitution

After collecting all the required information and documents, our team will conduct the know-your-customer (KYC) procedure. Once we get everything needed from you, we will proceed to file an application and submit it to ACRA.

5. Open a corporate bank account

To start a business in Singapore, you must set up a corporate bank account. Your business will require one to conduct business with clients or customers, partners, and perhaps the government. Since the company’s money is kept separate in its own account, it’s also the greatest approach to secure your personal assets.

With several large and reputed banks, Singapore has one of the world’s best banking systems. A corporate account with one of Singapore’s banks can significantly improve your company’s image.

Despite the fact that many banks’ application processes are very similar, each bank has its own set of approval criteria. Please, refer to our guide to opening a corporate bank account in Singapore for complete information. 

6. Goods and Service Tax (GST) registration

GST registration refers to tax levies for all Singapore-manufactured goods and services as well as foreign-based products that are imported to the country. The current GST rate in is 7%.

If your business is expected to generate over S$1million of annual taxable revenue, you must then register your company for GST. However, your company may be exempt from registering for GST if it provides financial services, digital payment tokens, the sale and the lease of residential properties, and the import and local supply.

Other things to note after incorporating your company in Singapore

During the whole period of operation, your business must also comply with the following regulatory requirements:

• Hold annual general meetings
• Pay corporate tax
• File annual returns with ACRA
• File tax returns with IRAS (the government agency for tax matters in Singapore)
• Maintain accounting records and company’s register
• Register for Central Provident Fund (CPF) if hiring local staff

Conclusion

The Singapore government has simplified rules to make it easy for foreigners to set up a business in Singapore. Once you’ve analyzed the information we’ve provided, you can start focusing on registering your dream company in the country.

Starting a business in Singapore for foreigners can be seamless when you engage in corporate services like ours. Our experience in all aspects of company incorporation can give you a good head start. You can reach out to Biz Atom to get the professional assistance you need. 

Need advice on the best structure
for your business

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